Brazil Election Jitters May Hit Investments in 2014

MarineLink.com
Tuesday, April 08, 2014

Brazil's presidential vote will likely delay some investment decisions this year but spending on infrastructure is expected to remain strong, a senior government official told Reuters.

Although President Dilma Rousseff is the favorite to win the Oct. 5 general election, many investors could withhold funds until the next government outlines its plans for the following four years, which could hamper the country's already slow economic growth.

"It is obvious that businesses will delay some investments until after the election to have more clarity," said the official, who asked not to be named because he is not allowed to speak publicly.

"But investment in infrastructure will not be affected because a lot of that construction is already under contract."

The official, who is involved in economic policy decisions, said the government expects investment commitments of about 100 billion reais ($45.48 billion) between 2014 and 2015 in roads, ports, airports, power generation and distribution projects.

That figure was close to $83 billion in 2013.

Rousseff, a left-leaning technocrat, launched a multibillion dollar infrastructure package in 2012 precisely to bolster investment, which is one of the main bottlenecks holding back the economy of the once-booming emerging-market star.

Investments in Brazil jumped 6.3 percent last year, but as percentage of GDP it remains stuck at only 18 percent, which is less than half of China's investment rate.

The central bank cited a sharp drop in investment as one of the reasons it revised down its economic growth forecast to 2 percent in 2014 from 2.3 percent. The economy has expanded on average about 2 percent per year since 2011, a far cry from the 4-percent growth rates of the past decade.

The political climate in Brazil is considered the biggest deterrent for investment after high taxes and red tape in a survey of foreign and local investors released in January by international accounting firm KPMG.

The elections, in which governors and lawmakers will also be elected, already had an impact on the value of local assets.

A drop in Rousseff's popularity in recent weeks helped spark a rally in local stocks. The decline raised hopes among investors that Brazil could see changes in policies that they blame for destroying the market value of state companies and undermining the economy.

The stagnation of investment in Brazil has more to do with a series of business barriers known here as Custo Brasil or "Brazil Cost," which includes high taxes, cumbersome red tape, faulty infrastructure and scarcity of qualified labor.

"Potential investors are asking more questions about political risk in Brazil since the drop in Rousseff's popularity," said Maria Luisa Cravo, investment manager at business promotion agency ApexBrasil.

But ultimately the most important factor holding back investors is not politics but the difficulty of doing business in Brazil, which is undermining the nation's ability to compete.

"There will be a downward trend in direct investment in the next few years due to the Custo Brasil, rising interest rates and the very high cost of labor," she said.

(By Alonso Soto and Luciana Otoni; Additional reporting by Anthony Boadle; Writing by Alonso Soto; Editing by Lisa Shumaker)

 

Maritime Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter July 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

Baltic Index Falls on Weak Freight Rates

The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, fell on Monday due to weaker rates across all segments, except handysizes.

As Market Sours, LPG Tankers Anchor off Singapore

Record U.S. LPG exports to Asia flip market into a glut. Last year, liquefied petroleum gas (LPG) supplied to Asia was being snapped up by petrochemical makers.

China sets up South China Sea environment protection fund

China has set up a 15 million yuan ($2.25 million) environmental protection fund for the South China Sea having already spent double that in the past four years,

Energy

Los Angeles Pushes for Valero Terminal Improvements

The Port of Los Angeles has released an Initial Study/Notice of Preparation (IS/NOP) — the first step in the Environmental Impact Report (EIR) process — for a Marine

Canada Seek to contain Oil Spill

Authorities are building a new containment boom to fight an oil spill in a major western Canadian river, officials said on Saturday, after the spill breached a

Ecuador Pays $112 mln Award to Chevron

Ecuador has paid $112 million to energy company Chevron Corp over a four-decade-old contract dispute, even though it remains in disagreement, the head of the central bank has said.

News

MSC Invests in TRAXENS Container Monitoring

MSC Mediterranean Shipping Company has reached an agreement to back French start-up TRAXENS, a developer of cargo logistics solutions and creator of a container monitoring and coordination system.

Passenger Vessel Runs Aground off Hawaii

The 65-foot commercial passenger vessel Spirit of Kona ran aground on the island of Hawaii, Sunday, the U.S. Coast Guard reported.   Coast Guard Sector Honolulu

Baltic Index Falls on Weak Freight Rates

The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, fell on Monday due to weaker rates across all segments, except handysizes.

Government Update

ASEAN Breaks South China Sea Deadlock

Manila drops request to refer to court ruling in statement. Southeast Asian nations overcame days of deadlock on Monday when the Philippines dropped a request

China sets up South China Sea environment protection fund

China has set up a 15 million yuan ($2.25 million) environmental protection fund for the South China Sea having already spent double that in the past four years,

Jakarta to Boost Security of Small Vessels

Jakarta will boost security of small vessels after hijackings 15 July, says a report in Protection Vessels International Ltd (PVI).   Indonesia is currently

Offshore Energy

Eni Cancels Vessel Deal with Viking Supply Ships

Viking Supply Ships A/S (VSS) has received an early termination notice of the contract for the Ice-class 1A AHTS “Njord Viking”. The vessel has been working for

MOL Signs Long-Term Charter with Uruguayan JV for FSRU

Japanese shipping company Mitsui O.S.K. Lines, has, through its wholly-owned subsidiary Lakler S.A., agreed to conclude a charter contract with Gas Sayago, for

Ithaca’s FPF-1 platform to be moved to Stella field

Ithaca Energy Inc. reports that the "FPF-1" floating production facility has completed the required inclination test as planned and departed the Remontowa shipyard in Gdansk, Poland.

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Navigation Offshore Oil Pod Propulsion Port Authority Ship Electronics Ship Repair Ship Simulators Sonar
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1149 sec (9 req/sec)